About Me

Monday, 19 May 2014

Keys Are For Keeps

The media suggest there
are people in a lather again about property prices, building and all the
rest. It is not surprising that there
seem to be problems.

This below is based on a
comment put on a blog today.

Over a number of decades
we have awarded ourselves much greater amounts of living space per head, believing
that the costs will be met essentially by future real economic growth.

We have changed our social
arrangements for personal partnerships in favour of forms of individualism that
add to housing demand.

We have gone for rapid population
growth unevenly distributed. The money
transactions resulting may give apparent growth but does not guarantee
increased real wealth per head.

We have created financial
means to allow multiple personal property ownership well beyond actual living
requirements. This has led to under
occupation in a number of areas.

We have channelled vast
credit facilities into the housing market to boost prices and activity. Mortgages have changed from being a long term
requirement to forms of credit used for short term gaming the market. "Trading
up" is an example.We have assumed that
building houses is necessarily investment when much of it amounts to
consumption. Also, the figures for
housing rarely if ever allow for maintenance, repair and other related costs.

We have allowed large
building firms, many of which have complex tax avoiding structures and aim for
maximising returns, to enjoy hidden subsidies and support.

We have not taken into
account the demographics which has led to a property rich number of the old
growing richer at the expense of the young generation, many of whom either
cannot afford or struggle to meet housing costs. At the same time the aged, including those in
social housing have benefits paid for by taxing the young in work.

We have allowed the social
housing sector to become discriminatory.
In particular this arises from allowing present residents and family members to enjoy
quasi-ownership rights. Again these are
heavily subsidised in many cases.

We have made promises arising
from the above to all and sundry that cannot possibly be fulfilled. Also, for property owning on mortgages these
are now largely securitised and used to fund speculation in financial
products.

We have in the rental
sector changed Housing Associations to
become financial operators as opposed to housing providers. The private market is now largely speculative
as opposed to being providers.

Then we wonder why things are
going wrong, notably the economy, social relationships, family life, the
benefit system, taxation policies and any sense of community or purpose in
saving or taking personal financial responsibility.